In two recent decisions, federal district courts in the Eastern District of Pennsylvania and the Southern District of Illinois, respectively, considered the Government’s motions to dismiss False Claims Act (FCA) lawsuits against pharmaceutical companies and marketing consultants alleging violations of the Anti-Kickback Statute (AKS) related to patient assistance programs. As discussed in our previous post, the two lawsuits were among 11 similar qui tam actions filed by corporate relators described by the Department of Justice (DOJ) as “shell companies,” and which DOJ sought to preemptively dismiss based on its view that the claims lacked merit and that litigation of the actions would waste “scarce government resources.”
In the Pennsylvania case, U.S. ex rel. Harris v. EMD Serono, Inc., the court granted DOJ’s motion to dismiss over the relators’ objection. In the Illinois case, U.S. ex rel. CIMZNHCA, LLC v. UCB, Inc., the court denied DOJ’s motion, declining to dismiss the case. Although reaching different dispositions, both courts parted ways with a prior decision of the U.S. Court of Appeals for the D.C. Circuit by holding that the Government does not possess “unfettered” discretion to dismiss FCA actions. Instead, the courts joined two other circuits in requiring the Government to demonstrate that its decision to dismiss an FCA action has “a rational relationship to a government interest.”
The circuit split highlighted by the decisions in EMD Serono and UCB is one of increasing importance in light of indications that the Government may be more aggressive in seeking preemptive dismissals of qui tam actions following the January 2018 Granston Memo.